Research firm SNL Kagan recently reported that for the first
time in history, the U.S. pay-TV market witnessed net subscriber
loss in 2013. The U.S. pay-TV market comprises three types of
service providers: cable MSOs (multi-service operators),
satellite TV operators and fiber-based telecom operators.
Though the cable TV operators were facing severe competitive
brunt for a long time, net subscriber gain by the satellite TV
and telecom operators were more than offsetting those losses.
However, the situation took a complete downturn in 2013.
In 2013, the U.S. pay-TV industry lost 251,000 subscribers
despite gaining net 40,000 subscribers in the fourth quarter. The
primary reason for this dismal situation is the availability of
low-priced online video-streaming services offered by
) and Hulu.
In order to survive the competition, attaining scale,
productivity and effective cost management become essential for
the pay-TV operators. This might have led to the proposed merger
nation's two largest cable TV operators, namely,
Time Warner Cable Inc.
). The proposed deal is currently awaiting regulatory
According to SNL Kagan, in 2013, the cable TV operators lost
nearly 2 million video subscribers including 388,000 in the
fourth quarter alone. Currently, cable MSOs together provide
video services to approximately 54.4 million customers in the
U.S., commanding a market size of 54%.
Satellite TV operators also facing tough times, but are still
adding subscribers. In 2013, satellite TV operators gained
170,000 subscribers compared with 288,000 in 2012. Currently,
satellite TV operators provide video services to around 34.3
million customers in the U.S., commanding a market size of
On the other hand, telecom operators, which provide
fiber-based high-speed video services, are gradually gaining
popularity. In 2013, telecom operators registered a net 1.5
million video customers compared with 1.3 million in 2012.
Currently, telecom operators provide video services to over 11
million customers, holding nearly 11% of the total market.
Internal dynamics of the pay-TV market are slowly shifting
toward fiber-based video offerings of large telecom and satellite
TV operators. Moreover, the strong presence of online video
streaming providers is posing significant threat to the existing
pay-TV business model. Video offering is the core business area
of the cable TV operators, which is slipping out of their
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